Gaurav Dua, head of research at Sharekhan said, “Despite so many new launches by peers, the company has maintained its market share. This clearly shows its strong positioning in the passenger vehicle segment.”Amit Mudgill | ETMarkets.com | May 27, 2017, 08:08 IST

NEW DELHI:Maruti Suzuki has been achieving new feats each passing day. Earlier this month, it became the first automaker to hit a market capitalisation (m-cap) of Rs 2 lakh crore on a closing basis.

Now, it is eying driving Tata Motors and Mahindra & Mahindra duo out of the m-cap race altogether.

At Wednesday’s trading price, m-cap of Maruti Suzuki stood at Rs 2.12 lakh crore, which was just 5 per cent away from the combined valuation of Tata Motors and Mahindra & Mahindra duo, which stood at Rs 2.2 lakh crore.

While analysts insisted that it would not be fair to compare Maruti Suzuki’s valuations with those of Tata Motors and Mahindra & Mahindra, given the different segments, product mix and margin profiles these automakers deal in, they largely see Maruti Suzuki as a solid long-term play.

“It will definitely cross the level some day, given its outstanding performance irrespective of the difficulties seen in the economy. It is a great stock and is fairly-valued,” said G Chokkalingam of Equinomics Research & Advisory.

The stock has rallied from Rs 6,000 level to Rs 7,000 in three months.

Analysts noted that the launch of Ignis, and the forthcoming model ‘Dzire’ whose waiting period already is eight weeks, are all hinting at favourable growth ahead.

Gaurav Dua, head of research at Sharekhan said, “Despite so many new launches by peers, the company has maintained its market share. This clearly shows its strong positioning in the passenger vehicle segment.”

“The Japanese currency yen is also under favourable marks for them and we are looking at multiyear at least three years growth from here on and the stock is also available at attractive price. The valuation has not run out ahead of time. With EPS at Rs 371, it is available at 19 times FY19 EPS. We are looking at 22 times PE multiple for this, and we are looking at Rs 8,060 as a price target,” said Yogesh Mehta of Motilal Oswal Securities in an interview to ET Now.

Chokkalingam, meanwhile, prefers Mahindra & Mahindra to Maruti Suzuki in the short term due to cheaper valuations and former’s attempts to diversify its business to non-tractor segments, take correction action in SUV segment.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.